Russia Wants $1 Billion for Failed Mistral Deal

Russia wants 1.163 billion euros ($1.32 billion) from France in compensation for cancelling a contract to deliver two Mistral helicopter carriers, a Russian source close to the negotiations said on Friday.

French President Francois Holland has come under pressure from his Western allies not to deliver the Mistrals because of Russia's role in the Ukraine crisis.

He discussed the 2011 contract worth 1.19 billion euros with Russian President Vladimir Putin last month and Moscow has said it is willing to accept financial compensation if Paris does not fulfill the deal.

The source said Russia was eyeing 1.163 billion euros, confirming a report on Friday by Russian daily Kommersant, which also said Paris was offering to pay 785 million euros.

"The 1.163 billion euros figure is a touch below the value of the contract," said the source, who spoke on condition of anonymity.

The source added that while Russia had not paid all of the contract's value, it had incurred additional expenses on personnel training, organizing production of parts for the vessel in Russia among other outgoings.

The spokesman for the Kremlin reiterated on Friday Russia was ready to accept financial compensation if France scraps the delivery and added that the issue was not a major headache in relations between the two countries.

"The principle is the following - either the goods or the money," the spokesman, Dmitry Peskov, told reporters, adding that Putin and Hollande had agreed to this basic approach.

Peskov did not comment on the details of the Kommersant report, which also said France wanted to resell the two Mistrals before compensating Russia while Moscow wanted to see the money before a third country gets the vessels.

"Both Mistral helicopter carriers were built for the Russian navy, for our helicopters, our control systems, our infrastructure. These vessels cannot be given away to some third country now under any circumstances, this is a matter of state security," Russia's Interfax news agency quoted senior defense ministry official Yury Yakubov as saying.

Speaking separately in Belgrade on Friday, Russian Foreign Minister Sergei Lavrov said Russia and France had agreed a basis for settling the dispute and that it was now being dealt with on a "legal and commercial" level.

Rosoboronexport, Russia's state-owned arms exporting firm, which signed the contract for the two Mistrals in 2011, declined to comment.